Fractal Analytics’ muted IPO debut signals persistent AI fears in India

Company Overview - Fractal Analytics is India's first AI company to go public, but its IPO debut was lackluster, with shares closing at ₹873.70, down 7% from the issue price of ₹900, resulting in a market capitalization of approximately ₹148.1 billion (around $1.6 billion) [2] - The company was founded in 2000 and transitioned to focus on AI and data analytics in 2022 after over 20 years as a traditional data analytics firm [6] Financial Performance - For the year ended March 2025, Fractal reported a 26% increase in revenue from operations, reaching ₹27.65 billion (around $304.8 million), and achieved a net profit of ₹2.21 billion ($24.3 million), recovering from a loss of ₹547 million ($6 million) the previous year [7] IPO Details - The IPO was initially set at ₹49 billion ($540.3 million) but was recalibrated to ₹28.34 billion (about $312.5 million), a reduction of over 40%, following conservative pricing advice from bankers [5] - Fractal's IPO pricing was influenced by a recent downturn in investor sentiment towards Indian software stocks [2] Market Context - India's government is actively positioning the country as a key market and development hub for AI, attracting interest from major global AI firms like OpenAI and Anthropic [4] - The AI Impact Summit in New Delhi highlights India's growing role in the global AI landscape, bringing together technology leaders and policymakers [5] Use of IPO Proceeds - The company plans to utilize the IPO proceeds for repaying borrowings at its U.S. subsidiary, investing in R&D, enhancing sales and marketing efforts under its Fractal Alpha unit, expanding office infrastructure in India, and pursuing potential acquisitions [8]